Barry v. Equitable Life Assurance Society — 59 N.Y. 587

Majority

p. 587

Rosalie C. Barry, Respondent, v. The Equitable Life Assurance Society of the United States, Respondent, and William H. Brune et al., Appellants.

(Argued December 21, 1874;

decided January 26, 1875.)

Headnote

Where the transfer of a chose in action is obtained from the owner by undue influence and coercion, a bona fide purchaser for value from the wrong-doer acquires no valid title thereto.

The act of 1840, in respect to insurances for lives for the benefit of married women (chap. 80, Laws of 1840), as amended (chap. 187, Laws of 1858; chap. 70,1863; chap. 650,1866; chap. 377, 1870; chap. 831, 1873), is not affected by the legislation enlarging the legal status of married women, but is still operative; and a policy issued under that act for the benefit of a wife, or in case of her death before her husband, of her children, is not assignable by her during the life of her husband. (Church, Ch. J., Allen and Andrews, JJ.)

A policy issued under said act by a corporation of this State, the contract having been made in this State, was assigned by the wife to secure a debt of her husband. The assignment was executed here, and by his direction sent by mail to the creditor who resided in Maryland. In an action brought here to determine the validity of the assignment, held, that the question was to be determined by the laws of this State.

Plaintiff (the widow) was called as a witness as to the transaction between herself and husband at the time of executing the assignment. This was objected to on the ground that she was not a competent witness thereto under section 399 of the Code. Held, that the objection was not tenable as defendant did not derive title from the deceased person.

The action was brought against the insurance company and the claimant under the assignment. The former conceded its liability and was ready to pay to whomsoever should be declared entitled. Costs were allowed it, to be paid by the unsuccessful claimant. Held, no error.

Appeal by defendants Bruñe and Whitredge from judgment of the General Term of the Supreme Court in the first judicial department, affirming a judgment in favor of plaintiff entered upon a decision of the court at Special Term.

This action was brought by plaintiff, the widow of John S. Barry, deceased, to determine conflicting claims of herself and defendants Bruñe and Whitredge to the amount of a policy of insurance issued by defendant The Equitable Life Assurance Society, on the life of said Barry.

p. 588

The court found the following facts, among others:

That the defendant The Equitable Life Assurance Society of the United States, a corporation existing under and by virtue of the laws of this State, carrying on business at the city of New York, and having its principal place of business in said city, on the 7th day of May, in the year 1868, at said city, on the application of John S. Barry, pursuant to its charter and the laws under which it was incorporated and. "organized, and also in conformity with an act of the legislature of the State of New York, entitled “An act in respect to insurances for lives, for the benefit of married women,” passed April 6th, 1840, as amended by subsequent acts of said legislature, made, issued and delivered to the plaintiff a policy of life insurance upon the life of the said John S. Barry, for the sole use of the plaintiff, who was then his wife, in the-amount of $10,000 (with participation in profits), for the term of his natural life, and did further agree to pay the amount of the said assurance, at the office of the said defendant, in the city of New York, to said plaintiff for her sole use, if living, in conformity with the statute, and if not living, to the children of the said John S. Barry, or their guardian for their use. The firm of John S. Barry & Co., whereof the said John S. Barry was a member, on the 15th day of May, 1871, loaned of defendant Bruñe his notes, agreeing to secure them by assignments of policies of insurance upon the life of said Barry. In the latter part of July, 1871, at the city of New York, the plaintiff affixed her signature to a paper upon which was printed the form of an assignment in blank. The plaintiff’s signature was affixed by her to the said paper on the faith of an express assurance from her said husband that her policies of assurance would not be lost by it; that she was not assigning any policy of assurance; that it was a mere paper which he would use as collateral to raise $10,000 for his immediate, necessities, and that if she did not sign it, he was a ruined man, in reputation and every thing. In signing the said instrument, the plaintiff acted under duress, coercion and undue

p. 589

■influence exercised over her by her said husband. The said plaintiff never received any consideration for signing said instrument. On the 2d day of August, 1871, by directions of Barry, James Middledith a member of the firm, filled up the .blank in the printed form of assignment, over the said signature of the plaintiff, by inserting therein the numbers and description of certain policies of life insurance, belonging to the plaintiff, including the one made and issued by the defendant, The Equitable Life Assurance Society, as hereinbefore stated, so that the said instrument thus filled up purported to assign .and transfer to Bruñe the policies therein mentioned and forwarded it by mail to Bl’nne, at Baltimore, Maryland, who received it on the following day. That such assignment was so sent in part performance of the undertaking of the loth of May, 1871. That the policy of insurance did not accompany said instrument, and the same was not delivered to, and was never in the possession of Bruñe, until January 1872, when it was delivered to him personally in the office of John S. Barry & Co., at the city of Hew York. The notes so loaned, were paid at maturity by the means of discounts of notes made by Bruñe and delivered to Barry, in renewal of the notes so maturing, and said renewals were made upon the faitli of the said policies of insurance assigned as aforesaid, including the said policy made by the Equitable Life Assurance Company; that said Bruñe had no notice of any duress or coercion, or undue influence practiced upon, or of any promises or assurance made to the plaintiff in respect to the said assignment, but received the same from said Barry in good faith, and for the consideration aforesaid. John S. Barry died at Hew York, on the 9th day of March, 1872, and due notice and proof of his death were given to the defendant The Equitable Life Assurance Society. On the 13tli day of February, 1872, William H. Bruñe made a general assignment of his estate, property and effects, to the defendant Horatio L. Whitredge, in trust for the benefit of creditors.

The court directed judgment for the amount of the policy

p. 590

against the company, with costs against defendants Bruñe and Whitredge, and also judgment for costs against them, in favor of the company.

Further facts appear in the opinion.

S. P. Nash for the appellants.

When plaintiff assigned the policies she was not under duress. (Warner v. Warren, 46 N. Y., 228 ; Bodine v. Killeen, 53 id., 93.) The policy in suit could be assigned by plaintiff. (Baker v. U. M. L. Ins. Co., 43 N. Y., 283 ; Thompson v. A., T. L. and S. Ins. Co., 46 id., 674; Emerich v. Coakley, 35 Md., 188 ; Pomeroy v. Manh. Ins. Co., 40 Ill., 398 .; Kernan v. Howard, 23 Wis., 728 ; Charter O. Ins. Co. v. Brant, 47 Mo., 419 ; Baker v. Young, id., 453 .) A .life policy considered as a contract, as property or as a contingent interest, is assignable. (Field v. Mayor, etc., 2 Seld., 179; Carver v. Creque, 46 Barb., 507 ; 2 Story’s Eq., § 1040 d; 1 R. S., 729, § 63; Campbell v. Foster, 35 N. Y., 361 ; Bliss on L. Ins. [2d ed.], § 341.) There is nothing in the terms of the policy which prevents its assignment. (Conn. M. Ins. Co. v. Burroughs, 34 Conn., 305 ; Swan v. Snow, 11 Al., 224; K. L. Ins. Co. v. Weitz, 99 Mass., 157 ; Burroughs v. State M. Ins. Co., 97 id., 359’; Stover v. Eycleshimer, 46 Barb., 84 ; 3 Keyes, 620; Miller v. Emans, 19 N. Y., 384 .) The question whether the assignment was effectual should be determined by the laws of Maryland. (Md. Code, art. 45, fol. 147; Emerich v. Coakley, 35 Md., 188 ; Donati v. Welsch, 24 N. Y., 157 .)

Edmund Randolph Robinson for the respondents.

The' policy in suit was not assignable. (Eadie v. Slimmon, 26 N. Y., 9 ; Ruppert v. U. M. Ins. Co., 7 Robt., 155; Secor v. Dalton, reptd. Bliss on L. Ins., § 340; 4 Edm. Stat., 510; id., 515 ; 6 id., 790; 7 id., 677; Laws 1840, chap. 80; Laws 1858, chap. 187; Laws 1862, chap. 70; Laws 1866, chap. 656; Laws 1870, chap. 277; Laws 1873, chap. 821; 1 Kent’s Com., 476; Goodell v. Jackson, 20 J. R., 722; Baker v. Lorillard, 4 Comst., 261; Cort. Co. v. Herk. Co., 44 N. Y., 27 ; Woolsey v. Judd, 4 Duer, 599 ; Olcott v. Tioga R. R. Co., 26 Barb.,

p. 591

157 .) The validity of the assignment should be determined by the laws of Hew York. (Story’s Confl. of Laws, §§ 383, 397, 398 ; Nat. Ins. Co. v. Barry, Pinckney, J.) Plaintiff’s signature to the assignment having been obtained by the coercion and duress of her husband invalidated it. (Hugenin v. Baseley, 14 Ves., 273; 3 L. Cas. in Eq., 94, 463; Eadie v. Slimmon, 26 N. Y., 9 ; Gardiner v. Gardiner, 34 id., 155 ; Voorhies v. Voorhies, 39 id., 463; Tyler v. Gardiner, 35 id., 559; Kinne v. Johnson, 60 Barb., 69 ; Ferris v. Bush, 1 Edw., 572 ; Fry v. Fry, 7 Paige, 461; Bank v. Copeland, 18 Md., 310 .) The diversion of the paper from the use contemplated by plaintiff made it void. (Craver v. Wilson, 14 Abb. [N. S.], 374; Hoffman v. Treadwell, 2 N. Y. S. C., 57; Swan v. N. B. Co., 2 H. & C. [Exch.], 175; Drury v. Foster, 2 Wall., 24 ; Byers v. McLanahan, 6 G. & J., 250 .)

(stating the views of the court). The judgment must be affirmed. The learned justice, at Special Term, has found, that the assignment of the policy was obtained from the plaintiff by undue influence ; she being in fear and under the compulsion of her husband, and acting under duress and coercion. He further finds that she did not freely or voluntarily sign the printed blank, which was afterward filled up so as to form an assignment. We have examined the testimony ; we cannot say that there is not in it that which will warrant those findings.

We do not agree, however, with the learned justice, that a bona fide purchaser for value, acquires a good title to a chose in action which he has bought from one who has procured it from the owner of it by undue influence, compulsion and coercion. There is a class of cases which hold that where the owner of property, induced by false representations, sells it and parts with the possession of it with' the intention of passing the title to the vendee, there the bona fide purchaser for value from the fraudulent vendee obtains a title which he can defend. In such case there is a voluntary parting with the possession of the property and there is an uncontrolled voli

p. 592

tion to pass the title. But wliere there exist coercion, throats, compulsion and undue influence, there is no volition. There is no intention nor purpose, but to yield to moral pressure, for relief from it. A case is presented more analogous to a parting with property fey robbery. No title is made through a possession thus acquired. (See Loomis v. Ruck^[1] in this court, May 26th, 1874.)

We cannot doubt that this policy was contracted for and issued with an eye to the provisions of the act of 1840 (Laws of 1840, chap. 80), as amended (Laws of 1858, chap. 187; Laws, 1862, chap. 70; Laws, 1866, chap. 656). It is expressed in it that it is in conformity to the statute. The terms of the contract, to pay on the termination of the life insured, are in close pursuance of the provisions of the act. That act as amended is still in existence and operative, notwithstanding the subsequent legislation enlarging the legal status of married women. The legislature has practically so declared by repeated amendments of it. (See, in addition to those above cited, Laws of 1870, chap. 277; Laws 1873, chap. 821.) We know of no subsequent legislation which can take the place of that in the act of 1840, exempting the insurance money from the claim of the personal representatives and creditors of the husband whose life has been insured in accordance with its enabling provisions. This being so, the majority of the judges taking part in the decision, feel not only bound to follow Eadie v. Slimmon ( 26 N. Y., 9 ), upon the principle of stare decisis, but as convinced that the decision of that case was correct in its result. That decision went, (in its denial of a motion for reargument), on several grounds: First. That by the common law a person could insure the life of another person only for the interest which he had in it; if he undertook to insure a gross sum, and the contract was not susceptible of a construction which would limit the recovery to the actual damages sustained, the contract would be void under the statute against gaming and betting; that this principle was relaxed in favor of a mar

* 56 N. Y., 462 .

p. 593

ried woman, by the act of 1840, so that she could insure for any sum for which she could obtain a contract from an insurance company. Second. That by the general rules of law, a policy on the life of one sustaining only a domestic relationship to the insured, would become inoperative by the death of such insured in the lifetime of oestui quo oie; or, if it could be enforced as existing for any purpose after that event, it would be for the benefit of the personal representatives of the insured; but that, by that act, the contract might be continued in favor of children of the insured wife, after her death. And, it was further remarked, that the act was special and peculiar, and looked to a provision for a state of widowhood and orphanage ; and that it would be a violation of the spirit of the provision to hold that a wife insured under that act could sell or traffic with her policy as though it were realized personal property, or an ordinary security for money. Upon this latter ground, the majority of the judges taking part in this decision now put their assent to Eadie v. Slimmon, and upon that ground also are for the affirmance of the judgment in this case. Without that act, when this policy was issued, the insurance money, being for premiums paid out of the funds or property of the husband, could not have been retained from the personal representatives or creditors. That act sought that result, not for the sake of the woman while a wife, but when a widow; not that she might sell or assign the contingency which was created by the policy, but that it should be kept for her until, by the death of her husband, she surviving, it became realized personal property; or for the children, when .by his death, after surviving her, it became realized personal property to them surviving. The majority of the judges taking part think that this is the policy and intention of the act, and that it still exists ; that the contract for insurance was issued under it and is controlled by it, and that the power of disposition over it is and should be restricted, so as to b'e in accordance therewith. They further think that the subsequent legislation, enlarging the legal capacity of married women, does not supersede the

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■act of 1840, nor give them other power to deal with a policy issued undpr it, than they had by it; for the reason that the act is an enabling act, confers a special privilege, and is in the nature of a law exempting goods from execution; that the privilege is given in view of an especial legislative intention and policy, which would be subverted if the contingent interests arising under it could be treated and dealt with as the separate property of a married woman, to be disposed of or affected by her subsequent contracts. The minority do not think the determination of this question necessai-y to a decision of the case, and doubting whether the effect of the married women’s act is not more sweeping than here allowed to be, express no opinion.

The appellants claim that the ease is to be decided upon the law as it is in the State of Maryland. This is not tenable; the contract was not made there. The insurance company is a corporation of this State, having its place of business here. The contract wras made here and is payable here, and this action is here. Mor was the assignment delivered out of this State. The appellant Bruñe received the policy in the city of Mew York; the assignment was there committed to the public mails, his agent for him, and received by him through the public mails.

The point that the plaintiff was not competent as a witness, under section 399 of the Code, is not tenable. Bruñe was not an assignee of John S. Barry, the deceased person.

The insurance company has not excited nor protracted this litigation; it 1ms been ready to pay the money to whomsoever should, by the judgment of a court, be declared entitled. It should not be mulcted in costs for the differences of parties whom it could not control. Its costs should be paid by some one, and reasonably by whomsoever began and carried on the unsuccessful litigation.

The judgment appealed from is affirmed, with costs.

The judges taking part in the decision of the case were Ohüeoii, Oh. J., Allen, Gboveb, Folg-kr and Andrews, JJ.

All concur in that part of the opinion putting the affirm

p. 595

anee on the ground of coercion; Church, Oh. J., Allen and Andrews, JJ., held the view expressed in the whole opinion; Rapallo, J., not voting.

Judgment affirmed.